Insurance Contracts and Property: Key Concepts and Definitions, Exams of Study of Commodities

Download Insurance Contracts and Property: Key Concepts and Definitions and more Exams Study of Commodities in PDF only on Docsity! AL P&C UNIVERSITY OF ALABAMA STUDY GUIDE FINAL EXAM QUESTIONS AND ANSWERS If a company cancels an auto policy mid-term, the refund will be made on a : A. pro rata basis B. short rate basis C. retroactive basis D. coinsurance basis - CORRECT ANSWER -A. Pro Rata Basis What is the term used to describe terminating the insurance relationship at the end of the policy period? A. Cancellation B. Nonrenewal C. Separation D. Exclusion - CORRECT ANSWER -B. Nonrenewal Which is the best example of an indirect loss? A. Sequential loss B. Liability loss C. Employee theft D. Loss of use - CORRECT ANSWER -D. Loss of use Which is a two party contract? A. Property B. Casualty C. Liability D. Auto - CORRECT ANSWER -A. Property Insurance contracts offset A. speculative risk B. pure risk C. gambling D. created risk - CORRECT ANSWER -B. Pure risk Which of the following is a third party contract? A. Property B. Casualty C. Earthquake D. risk retention group - CORRECT ANSWER -A. admitted company A company chartered in Guam or Puerto Rico doing regular business in New York would be considered by New Yorkers to be a(n) A. domestic compnay B. foreign company C. alien company D. international company - CORRECT ANSWER -B. foreign company With regard to insurance, the term consideration means A. the premium and the statements on the application B. the insurer's method of evaluating the applicant for coverage C. the screening process all agents undergo prior to licensing. D. the side-by-side policy comparison by the applicant - CORRECT ANSWER -A. the premium and the statements on the application Which of the following terms indicates that an insurance contract contains the legal enforceable promises of only one party? A. Adhesion B. Unilateral C. Conditional D. Aleatory - CORRECT ANSWER -B. Unilateral In purchasing an insurance contract, the applicant must accept the contract as written. This type of contract is referred to as a(n) A. settled contract B. aleatory contract C. contract of adhesion D. personal contract - CORRECT ANSWER -C. Contract of adhesion Which of the following principles states that in forming an insurance contract, both parties have a responsibility to the order? A. Doctrine of Warranties B. Doctrine of Representations C. Doctrine of Utmost Good Faith D. Doctrine of Reasonable Expectations - CORRECT ANSWER -C. Doctrine of Utmost Good Faith An incorrect statement made intentionally on a Personal Auto insurance application is a A. Fraud B. Warranty C. Misrepresentation D. Conceament - CORRECT ANSWER -C. Misrepresentation A binder is a(n) A. Interim insuring agreement B. Application C. Counteroffer D. Endorsement - CORRECT ANSWER -A. Interim insuring agreement Which of the following is NOT true regarding consideration in a P & C policy? A. Part of the insured's consideration is the premium B. Parts of the insured's consideration are the statements on the application C. Parts of the company's consideration are the promises in the policy D. Part of the company's consideration is the payment of a claim - CORRECT ANSWER -D. Part of the company's consideration is the payment of a claim Any ambiguities in a P & C policy will be resolved in favor of the policyowner because the policy is a(n) A. contract of adhesion B. conditional contract C. unilateral contract D. Aleatory contract - CORRECT ANSWER -A. contract of adhesion A person who has responsibility for the financial wellbeing of another is a(n) A. accountant B. attorney-in-fact C. broker D. fiduciary - CORRECT ANSWER -D. fiduciary C. liberalization D. coinsurance - CORRECT ANSWER -C. liberalization The insured's hone is destroyed by a plumber with an out of control blowtorch. The company pays for the loss and then sues the plumber. This process is known as A. liberalization B. subrogation C. salvage D. insurable interest - CORRECT ANSWER -B. subrogation Under a Special Cause of Loss form, the burden of proof following a claim is on the A. insured B. company C. assignee D. mortgagee - CORRECT ANSWER -B. company Under the Broad Form Cause of Loss, the burden of proof following a claim is the responsibility of the A. Insured B. company C. assignee D. mortgagee - CORRECT ANSWER -A. Insured In P & C policies, the part of the policy which names the insured, the property to be covered and the limits of the policy is known as the A. policy farce B. insuring agreement C. declarations D. conditions - CORRECT ANSWER -C. declarations Which of the following does NOT follow the concept of indemnification? A. Compensatory damages B. Special Damages C. General Damages D. Punitive Damages - CORRECT ANSWER -D. Punitive Damages Which is true about Umbrella Liability policies? A. they are extremely expensive B. they are designed to be the primary payor C. they are written for excessive amounts D. they are the same as Excess Liability policies. - CORRECT ANSWER -C. they are written for excessive amounts A demolition company is using dynamite to destroy an old downtown building. Which of the following applies? A. Negligence B. Strict Liability C. Premises Liability D. Products Liability - CORRECT ANSWER -B. Strict Liability The liability term used to describe damage to an individual's mental state is: A. bodily injury B. property damage C. personal injury D. advertising injury - CORRECT ANSWER -C. personal injury Which of the following is true concerning the Medical Payments section of a liability contract? A. It pays only if the insured is legally liable B. It can pay for the injured party's lost wages C. It has rather low dollar limits D. it pays in addition to any liability judgments - CORRECT ANSWER -C. It has rather low dollar limits You are hit by a Greyhound bus, this incident is a(n) A. accident only B. occurrence only C. both D. Neither - CORRECT ANSWER -C. both If your $5000 gold watch is stolen, how would your homeowners policy respond? A. The watch would be covered B. The loss would be excluded C. The loss would be limited in coverage D. It would depend upon the circumstances of theft - CORRECT ANSWER -C. The loss would be limited in coverage How would an HO-8 respond to a loss due to weight of ice and snow? A. The loss would be covered B. The loss is not due to a covered peril C. the HO-8 would cover the functionally equivalent cost of repairs D. The loss is excluded by the HO-8 as a predictable loss - CORRECT ANSWER -B. The loss is not due to a covered peril Based upon the number of perils covered, which Homeowners for is the most limited? A. HO-2 B. HO-3 C. HO-4 D. HO-8 - CORRECT ANSWER -D. HO-8 Based upon the number of perils covered, which Homeowners Form is the most generous? A. HO-2 B. HO-3 C. HO-5 D. HO-8 - CORRECT ANSWER -C. HO-5 What is the maximum that the Fire Department service charge can pay in a Homeowners policy? A. 100 B. 200 C. 300 D. 500 - CORRECT ANSWER -D. 500 What is the standard deductible in an HO-3? A. 50 B. 100 C. 250 D. 500 - CORRECT ANSWER -C. 250 What is the maximum horsepower allowed for a boat that you own to be covered under the Personal Liability section of a Homeowners policy? A. 25 B. 50 C. 100 D. 200 - CORRECT ANSWER -A. 25 You are driving your car with your son and the neighbor's kid to soccer practice when you run a red light and hit Calvin and his family in their car. Under what part of your Personal Auto Policy would Calvin's injuries be? A. Part A B. Part B C. Part C D. Part D - CORRECT ANSWER -A. Part A Using the above information, what part of your policy covers the neighbor kid's injuries? A. Part A B. Part B C. Part C D. Part D - CORRECT ANSWER -B. Part B Using the above information what part of your policy covers Cal's car? A. Part A B. Part B C. Part C D. Part D - CORRECT ANSWER -A. Part A Using the above information what part of your policy covers your car? A. Part A A. $0 B. 500 C. $1,000 D. $1,500 - CORRECT ANSWER -A. $0 A Boatowners policy is usually written on what basis? A. ACV B. Agreed Value C. Functional replacement Value D. Replacement cost - CORRECT ANSWER -D. Replacement cost Which of the following would a boatowners policy NOT cover? A. hull B. trailer C. Motors D. Fishing equipment - CORRECT ANSWER -D. Fishing equipment If the owner of a Yacht policy warrants that his vessel will be in storage through May 1, and is actually sailing his boat on April 10 when the company discovers his actions, what will happen? A. He will be reprimanded B. He will be fined C. His coverage will be cancelled D. his rates will increase - CORRECT ANSWER -C. His coverage will be cancelled Under the National Flood Program, which of the following is true? A. You must live in a flood plain to buy the policy B. If your community fails to participate you may still purchase flood insurance C. Building losses are settled ACV and contents are settled as Replacement cost D. the minimum building deductible for a property insured for $90,000 is $1,000 - CORRECT ANSWER -D. the minimum building deductible for a property insured for $90,000 is $1,000 Which of the the following could a farmer NOT cover under an NFIP policy? A. House B. Barn C. Growing Crop D. Silo - CORRECT ANSWER -C. Growing Crop The Commercial Package policy may contain a maximum of how many coverage modules? A. 1 B. 2 C. 7 D. 9 - CORRECT ANSWER -C. 7 The ranking insured in the Commercial Package Policy is the A. Named Insured B. First Named Insured C. Mortgagee D. Assignee - CORRECT ANSWER -B. First Named Insured A Policy is written to provide only Equipment Breakdown coverage is a A. Monoline Policy B. multi-line Policy C. package Policy D. commercial policy - CORRECT ANSWER -A. Monoline Policy A CPP goes into effect at what time of day? A. 12:01pm B. 12:01 AM C. 12:01 fm D. 12:01 bc - CORRECT ANSWER -B. 12:01 AM Which of the following is Not a coverage module choice in the CPP? A. Crime B. Farm C. Inland marine D. Garagekeepers - CORRECT ANSWER -D. Garagekeepers The earthquake endorsement to a commercial property policy treats all shocks within what period of time as a single occurrence? A. 24 hour B. 72 hour C. 148 hour D. 168 hour - CORRECT ANSWER -D. 168 hour When a dry cleaner accepts a customers suit for cleaning, the dry cleaner becomes: A. assignee B. Principal C. agent D. Bailee - CORRECT ANSWER -D. Bailee Which of the following is NOT covered by the CGL? A. Premises Liability B. Pollution Liability C. Products Liability D. Contractual Liability - CORRECT ANSWER -B. Pollution Liability For which of the following would Med Pay provide coverage? A. A child hurts herself with a toy B. You are ill from food poisoning D. A newly installed awning collapses on your head - CORRECT ANSWER -C. A carpenter at your house drops a hammer on your foot 3. For which of the following would a CGL provide coverage for a Law Firm? A. Professional Liability B. Host Liquor Liability C. Employee Injury Liability D. Directors and Officers Libiability - CORRECT ANSWER -B. Host Liquor Liability 4. Which of the following only pays of you are legally liable? A. Medical Payments B. Defense Costs C. Bodily Injury Liability D. Supplementary Payments - CORRECT ANSWER -C. Bodily Injury Liability 5. Which CGL coverage's does the National Inquirer get? A. A & B B. A & C C. B & C D. A,B, & C - CORRECT ANSWER -B. A & C 6. Commercial Med Pay will make medical payments for up to how long after a loss? A. 1 yr B. 2 yr C. 3yr D. 5 yr - CORRECT ANSWER -A. 1 yr 7. A policyowner is charged a self-insured retention with his umbrella when A. he suffers any loss B. his underlying coverage reaches its limit C. his Excess Liability policy reaches is limit D. his underlying policy does not provide coverage - CORRECT ANSWER -D. his underlying policy does not provide coverage Which of the following is covered under the CGL? A. Pollution Liability B. Professional Liability C. Employee injury liability D. Independent Contractor liability - CORRECT ANSWER -B. Professional Liability Medical Payment limits are expresses as A. occurrence limits B. aggregate limits C. agreed value limits D. per person limits - CORRECT ANSWER -D. per person limits Which would not be covered under a Commercial Crime policy? A. Theft B. Forgery C. Vandalism D. Computer Fraud - CORRECT ANSWER -C. Vandalism Forgery and Alterations covers Commercial Crime Losses involving A. incoming counterfeit money B. incoming counterfeit money orders C. outgoing instruments D. outgoing instruments altered by an employee - CORRECT ANSWER -C. outgoing instruments Insuring agreement #3- Inside the Premises-- theft of Money and Securities covers all EXCEPT A. money destroyed by a fire B. money stolen from a vending machine C. money that disappears D. money that is taken in a robbery - CORRECT ANSWER -B. money stolen from a vending machine The boiler at XYZ Manufacturing was destroyed in a factory fire. The Boiler loss is covered under A. Commercial Property coverage B. Equipment Breakdown coverage C. Inland Marine coverage D. None of the above - CORRECT ANSWER -A. Commercial Property coverage XYZ's boiler explodes, setting the factory on fire and causing extensive smoke damage. Significant water damage is done by the fireman extinguishing the blaze. All are true about XYZ's coverage EXCEPT: A. the boiler is covered by equipment breakdown B. Fire damage is covered by equipment breakdown coverage C. the water damage is covered by commercial property coverage D. the smoke damage is covered by commercial property coverage - CORRECT ANSWER -B. Fire damage is covered by equipment breakdown coverage Which of the following would NOT be covered by Equipment Breakdown coverage? A. Steam Boilers B. Refrigeration Equipment C. Computers D. Toilets - CORRECT ANSWER -D. Toilets Equipment Breakdown coverage losses are settled on what basis A. ACV B. Replacement Cost C. Functional Replacement Cost D. Agreed Value - CORRECT ANSWER -B. Replacement Cost The insurance company may suspend coverage on any unsafe insured object by giving written notice how many days in advance? A. 10 B. 15 C. 30 D. the suspension is immediate - CORRECT ANSWER -D. the suspension is immediate How many vehicles are required to qualify for fleet rates? A. 5 or more B. 10 or more C. 20 or more D. 25 or more - CORRECT ANSWER -A. 5 or more A company which provides private passenger vehicles for each of its 10 sales reps would likely purchase the A. Business Auto coverage form B. motor carriers coverage form C. Auto dealers coverage form D. personal auto policy - CORRECT ANSWER -A. Business Auto coverage form A business concerned with its liability when employees use their own vehicles on company business needs A. Drive other car coverage B. Boats C. Commercial Property floater risks D. Commercial Liability floater risks - CORRECT ANSWER -C. Commercial Property floater risks The property coverage's under a BOP protect against losses due to A. Basic Perils B. Broad Form Perils C. Specified Perils D. Open Perils - CORRECT ANSWER -D. Open Perils The Additional coverage and the Extensions coverage under a BOP A. must be purchased separately B. must be earned C. are provided automatically D. are added by endorsement - CORRECT ANSWER -C. are provided automatically Liability Coverage under a BOP is A. occurrence triggered B. accident triggered C. Claims Made triggered D. either Claims Made or Accident Triggered - CORRECT ANSWER -A. occurrence triggered Minimum liability limits under a BOP are A. 50,000 per occurrence B. 100,000 per occurrence C. 250,000 per occurrence D. 300,000 per occurrence - CORRECT ANSWER -D. 300,000 per occurrence The Fire legal limit under a BOP is A. 25,000 B. 50,000 C. 100,000 D. 250,000 - CORRECT ANSWER -B. 50,000 The basic deductible under a BOP is A. 500 B. 1,000 C. 2,500 D. 5,000 - CORRECT ANSWER -A. 500 A building insured under a BOP loses vandalism coverage after it has been vacant for ____ Days. A. 1 B. 2 C. 3 D. 6 - CORRECT ANSWER -D. 6 Business personal property moved to a new location to protect it from a covered peril is covered by the BOP for up to _____ days. A. 1 B. 3 C.6 D.9 - CORRECT ANSWER -B. 3 Which of the following would NOT be eligible for a BOP? A. Funeral Parlor B. Florists Shop C. Parking Garage D. Bakery - CORRECT ANSWER -C. Parking Garage Which business would be eligible for a BOP? A. fast food restaurant B. Gas Station C. Tavern D. Bank - CORRECT ANSWER -A. fast food restaurant A. Frequency of claims B. Severity of Claims C. Cause of claims D. Cost of claims - CORRECT ANSWER -A. Frequency of claims Which Federal Workers Comp Law covers seamen? A. Federal Employer Liability Act B. Longshore and harbor Workers Act C. Jones Act D. Outer Continental Shelf Lands Act - CORRECT ANSWER -C. Jones Act Which Federal Workers Comp Law covers Postal workers? A. Federal Employer Liability Act B. Longshore and harbor Workers Act C. Jones Act D. Outer Continental Shelf Lands Act - CORRECT ANSWER -A. Federal Employer Liability Act 1. To obtain an Alabama Producer's license you must be at least A. 16 B. 18 C. 21 D. 22 - CORRECT ANSWER -B. 18 2. The concept of due process involves which of the following elements? A. Notice B. Hearing C. both notice and hearing D. neither notice nor hearing - CORRECT ANSWER -C. both notice and hearing 3. If Alabama Department of Insurance believes you are in violation of the insurance statues and you file a written demand for a hearing, how soon does the Commissioner have to hold the hearing? A. 7 B. 10 C. 14 D. 30 - CORRECT ANSWER -D. 30 4. In Alabama, the Commissioner of Insurance is A. Elected B. a secondary duty of the Lt. Gov C. Appointed by the Gov D. Selected by Legislature - CORRECT ANSWER -C. Appointed by the Gov 5. The prelicensing education requirement for a Life and Health License is A. 10 hours B. 12 hours C. 40 Hours D. 50 Hours - CORRECT ANSWER -C. 40 Hours 6. The Commissioner of Insurance may do which of the following? A. sentence you to prison for violating state insurance laws B. conduct examinations of insurance companies C. Amend insurance law as required by the public interest D. Serve as chairman of the Alabama State Democratic Party - CORRECT ANSWER -B. conduct examinations of insurance companies 7. A Change in your legal address requires that you notify the Commissioner within how many days? A. 10 B. 14 C. 30 D. 60 - CORRECT ANSWER -C. 30 8. How many hours of insurance continuing education must you complete each year? A. 10 B. 12 C. 15 D. 40 - CORRECT ANSWER -B. 12 1. Which statement concerning a Binder is true? A. A Binder must be issued in writing to be valid B. A Binder is valid for a maximum of 60 days C. A Binder is valid for a maximum of 90 days D. A Binder provides only partial coverage of a risk - CORRECT ANSWER -C. A Binder is valid for a maximum of 90 days 2. An adjusters license could not be issued to: A. a nonresident of Alabama B. An individual contracted by an insurance company C. an 18 year old Alabama resident D. a full-time salaried employee of a licensed Insurance Adjuster - CORRECT ANSWER -C. an 18 year old Alabama resident 3. Unless suspended or revoked, an Adjuster's license remains in effect for: A. 6 months B. One Year C. Two years D. Four Years - CORRECT ANSWER -C. Two years 4. A Surplus Line Producer places coverage with an unauthorized insurer. The producer must file an affidavit with the state within: A. 10 days of the effective date of coverage B. 20 days of policy delivery C. 30 days of the effective date of coverage D. 31 days of policy delviery - CORRECT ANSWER -C. 30 days of the effective date of coverage 5. A Surplus Line Producer most post a bond in the amount of: A. $10,000 B. $20,000 C. $25,000 D. $50,000 - CORRECT ANSWER -D. $50,000 6. The purpose of the Insurance Guaranty Association is to: A. Provide Insurance companies with a reserve amount of money the can access to pay claims B. Guarantee everyone who applies for a policy is accepted C. Protect policy owners if an insurance company becomes insolvent D. standardize and guarantee premiums - CORRECT ANSWER -C. Protect policy owners if an insurance company becomes insolvent 7. The maximum liability of the Insurance Guaranty Association on any one claim is: A. $150,000 B. $ 200,000 C. $250,000 D. $500,000 - CORRECT ANSWER -A. $150,000 8. Which of the following would most likely be covered by Workers Comp? A. An intoxicated employee injures himself at work B. An employee is injured by a negligent act of a co-worker C. An employee is injured by the intentional act of a co-worker D. An employee with a stressful personal life suffers a mental breakdown - CORRECT ANSWER -B. An employee is injured by a negligent act of a co-worker 9. Which of the following would be classified as a dependent under Workers Comp Law? A. the unemployed 21 y/o son of an injured employee B. the married 18 y/o daughter on an injured employee C. The former wife of the employee D. the handicapped, unemployable 22 y/o son of the injured employee - CORRECT ANSWER -D. the handicapped, unemployable 22 y/o son of the injured employee 10. Death benefits could be paid under Workers Comp for a maximum of: A. 26 weeks B. 52 weeks C. 200 weeks D. 500 weeks - CORRECT ANSWER -D. 500 weeks 11. Under Workers Compensation an injured employee who loses sight in both eyes would most likely be classified as: B. By law it must be offered in every Auto Policy C. The insured can only collect from uninsured motorist if they (the insured) are at fault for an accident D. The minimum amount of bodily injury that must be included is $40,000 per person - CORRECT ANSWER -B. By law it must be offered in every Auto Policy 7. What is the minimum age at which older drivers may be eligible for a rate reduction? A. 45 B. 50 C. 55 D. 60 - CORRECT ANSWER -C. 55 8. If, for the second time during a four year period the owner of a car has been found to have not maintained the legal liability coverage required, then his registration can be suspended for: A. 30 days B. 4 months C. 6 months D. 12 months - CORRECT ANSWER -B. 4 months 9. Which of the following could be used as Evidence of Insurance? A. a cancelled check B. a receipt from a licensed insurance Producer C. a bank statement D. a business card from a licensed insurance producer - CORRECT ANSWER -B. a receipt from a licensed insurance Producer 10. A driver has liability limits of 25/50/25. The most his policy will pay for Property Damage in any one occurrence is: A. $25,000 B. $50,000 C. $75,000 D. $100,000 - CORRECT ANSWER -A. $25,000 1. The insurance commissioner is: A. elected B. appointed by the Gov C. appointed by the AL legislature D. always chosen from a list of insurance executives recommended by legislators. - CORRECT ANSWER - B. appointed by the Gov 2. Any willful violation of insurance law that does not carry a specific penalty is considered a misdemeanor, punishable by possible jail time and a fine up to A. $500 B. $1,000 C. $2,000 D. $10,000 - CORRECT ANSWER -B. $1,000 3. Your unlicensed brother-in-law Jeremy used some of your sales materials to sell a Life Policy to a friend of his. Now he wants the $400 commission you would have been paid for the sale. If you pay the commission, how much could you be fined for paying a commission to a non licensed person? A. $10,000 B. $1,200 C. $400 D. the law doesn't provide for a fine but you could lose your license - CORRECT ANSWER -B. $1,200 4. To be able to transact business in AL, an insurance company must A. be approved by a majority of existing insurance companies operating in the state B. be recommended by the AL Legislative Oversight Committee C. hold an AL Certificate of Authority D. Prove that its policies will offer better coverage or lower prices than any other insurer operating in the state - CORRECT ANSWER -C. hold an AL Certificate of Authority 5. The minimum age for obtaining a resident insurance Producer license is A. 18 B. 20 C. 21 D. not regulated - CORRECT ANSWER -A. 18 6. Before taking the written exam for a Producers license, and applicant for Life and Health license must complete ___ prelicensing course hours from an approved provider? 14. Which of the following is NOT an Unfair Trade Practice in AL? A. Rebating B. Twisting C. Failure to pay income taxes D. Unfair Discrimination - CORRECT ANSWER -C. Failure to pay income taxes 19. If the Commissioner notifies you that you may have violated the Unfair Trade Practices Act, you will have at least _____ days before a hearing where you can tell your side of the story. A. 5 B. 10 C. 15 D. 30 - CORRECT ANSWER -B. 10 21. TO be granted an Al Adjusters license, and applicant must be A. 18 or older B. 19 or older C. 21 or older D. 18 or older PLUS 2 years apprenticeship - CORRECT ANSWER -B. 19 or older 22. Unless suspended, an Adjusters license is valid for A. 2 years B. 3 years C. 4 years D. indefinitely - CORRECT ANSWER -A. 2 years 23. When is it NOT legal to sell a Surplus Line policy in Alabama? A. When the policy is bought from a Producer who is licensed in another state with AL reciprocity B. When an AL Producer pays the Surplus Lines Agent C. When coverage is not available from an authorized insurer D. When coverage is sough solely because the Surplus line policy offers cheaper premiums - CORRECT ANSWER -D. When coverage is sough solely because the Surplus line policy offers cheaper premiums 24. To get a Surplus Lines license in AL, an applicant must hold a valid P and C AND A. be appointed by an AL company B. post a $50,000 bond C. post a $75,000 bond D. be a member of the Insurance Guaranty Association - CORRECT ANSWER -B. post a $50,000 bond 26. Which of the following is NOT an exception to required coverage by Workers Comp Laws? A. a HS student who has a job as a farm hand worker in the summer B. a part time nany C. a woman who demo's and sells blenders in supermarkets D. a minor who works 30 hours a week - CORRECT ANSWER -D. a minor who works 30 hours a week 29. Workers Comp pays burial expenses for those who die because of an on the job injury in the amount of A. 1,500 B. 2,500 C. 3,000 D. 5,000 - CORRECT ANSWER -C. 3,000 30. An injured employee who received Perm Total Disability will receive A. 2/3 of average weekly earnings B. 1/2 of average weekly earnings C. 90% of average weekly earnings D. 100% of average weekly earnings for 10 years - CORRECT ANSWER -A. 2/3 of average weekly earnings 31. In Al, the minimum legal liability limit for Bodily Injury per occurrence is A. 25,000 B. 35,000 C. 50,000 D. 100,000 - CORRECT ANSWER -C. 50,000 32. When Sandra is stopped for a moving violation by the AHP she couldn't find her insurance card. How long does she have to prove she had insurance before her license is suspended. A. 10 days 15. An unforeseen and unintended event that happens at a known time in a known place is define as a(n) A. peril B. Hazard C. accident D. occurrence - CORRECT ANSWER -C. accident 17. A family that regularly leaves their house unlocked would be considered to be a ______ A. Moral hazard B. Morale hazard C. Physical hazard D. Premises hazard - CORRECT ANSWER -B. Morale hazard 18. In an insurance contract, consideration is best defined as ________. A. money only B. representations only C. something of value D. claim payments - CORRECT ANSWER -C. something of value 25. What is the primary objective of the Med Pay to Others coverage in Section 2 of a homeowners policy? A. Provide first aid coverage for the family members B. To avoid negligence claims C. To pay only if the insured is negligent D. To offset the liability deductible - CORRECT ANSWER -B. To avoid negligence claims 26. Which homeowners coverage provides for indirect loss coverage A. Coverage A- Dwelling B. Coverage B- Other Structures C. Coverage C- Personal Property D. Coverage D- Loss of Use - CORRECT ANSWER -D. Coverage D- Loss of Use 27. A home is covered under s Homeowners Comprehensive for HO-5 for $150,000. The cost of replacing the home is $200,000. Following a total loss, the insured would receive a settlement up of _________, disregarding any deductible. A. up to the Replacement Cost B. up to the Actual Cash Value C. up to the Market Value D. up to the stated Value - CORRECT ANSWER -B. up to the Actual Cash Value 29. Which of the following is true concerning a Special Form Homeowners HO-3 without endorsement? A. It will pay ACV of personal property losses. B. Coverage A Dwelling is issued on a named peril basis C. Coverage B Other Structures is removed by endorsement to reduce the premium if there are no other structures D. the HO-3 is most frequently used to cover tenants - CORRECT ANSWER -A. It will pay ACV of personal property losses. 30. A Dwelling policy sold without endorsement will cover_____ A. theft B. property C. casualty D. medical payments - CORRECT ANSWER -B. property 33. For which of the following losses would you have coverage under a DP-3/ A. a thief steals your tools from the garage B. Your dog bites your neighbor C. Ice blocks your gutters ans water seeps into your home D. A visitor trips in your living room a breaks his wrist - CORRECT ANSWER -C. Ice blocks your gutters ans water seeps into your home 38. A Personal Auto Policy will provide Supplementary Payments to cover all of the following EXCEPT: A. costs of investigating the accident B. the premium for a bail bond C. the premium for an appeal bond D. rental car coverage - CORRECT ANSWER -D. rental car coverage 41. The collision coverage of a Personal Auto Policy pays claims on what basis?